Do you find it hard to make big decisions? In a video lecture from the University of the Netherlands, Professor of Economics of Uncertainty at Erasmus School of Economics, Aurélien Baillon, teaches you a method to make the right decisions.
If you are given a choice to participate in a game where you flip a coin, would you participate when you can only win 100 euros and lose 10,000 euros? We hope you don't. Even if you win, you shouldn't come to think of your choice as a right one. After all, hindsight bias and illusion of control can lead to great losses. According to Baillon, to make good choices, we must not look at the consequence or even the selected action. We must understand and analyse the process that leads to the right decision. There are four key principles when it comes to good decision making according to subjective expected utility theory:
- Completeness
- Transitivity
- Sure-thing
- Comparative probability
Professor Baillon leads you through this theory, explains the key principles, gives you a concrete example with a case and tells you about the most frequent mistakes. So go and watch his lecture, it’s only 15 minutes!
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You can watch the full lecture by professor Baillon at the University of The Netherlands, 2 September 2021, here.
